Interest Rates and Mortgage Delinquency Drop, Home Depot Profits Rise

Mortgage Rates Hit New Record Lows

Buyers take note. Mortgage giant Freddie Mac said that the average rate on 30-year loans slipped to 3.34 percent this week, creating a new record. That’s the lowest the rates have hit since the mortgage finance company began keeping records in 1971. The previous record low was 3.36 percent in October.

Rates on 15-year loans also decreased to 2.65 percent, another record low. The low rates have been a key factor in jumpstarting the depressed housing market. Mortgage rates have hovered below 4 percent for quite some time now. The rates took more hits since September when the Federal Reserve began buying up mortgage bonds in order to encourage consumers to invest in home buying.

So far the strategy seems to have worked. New home sales are on the rise, and so are existing home sales. The decreasing inventory has helped brighten the mood of builders who are breaking ground on more new development. The low rates have also encouraged homeowners to refinance, freeing up disposable income to invest in other assets, including possibly a second home.

Mortgage Delinquency Rate Drops in Third Quarter

This week, data from the Mortgage Bankers Association show that fewer homeowners were behind in their mortgage payments in the third quarter, a really positive sign for the housing market.

The delinquency rate on all loans dropped to 7.40 percent from 7.58 percent the previous quarter, MBA said. A year ago the rate was 7.99 percent. The seasonally adjusted rate takes into account loans that have at least one missed payment but have not entered the foreclosure process. So, it doesn’t mean that all these homes would end up in foreclosure.

According to the MBA, the good showing this quarter is partly due to the drop in delinquency in the number of homeowners who were 90 days or more behind on payments. That number fell from 3.19 percent to 2.96 percent, the lowest since 2008. The percentage of loans that are in foreclosure slipped to 7.03 percent from 7.31 percent. That’s a significant drop compared to 7.89 percent last year.

“These loans are working their way through the process,” Mike Fratantoni, MBA’s vice president of research and economics told Reuters. “That’s being helped by the continued economic growth and job growth we’ve had, (and) by what looks like a real turnaround in the housing market.”

But the worrisome days aren’t totally over. At least not yet. Loans that were 30 days past due rose to 3.25 percent from 3.18 percent in the previous quarter. And even though the number of loans in foreclosure at the quarter’s end had the biggest quarterly drop on record, the level is still about four times the long-run average, according to Reuters.

The silver lining is that the plummeting numbers for foreclosure inventory and loans that were at least three months behind signal that there will be less shadow inventory bearing down on the market.

“It will increase confidence that we’re not going to get another wave of distressed properties hitting the market,” which should instead go up for sale at a steady pace, Fratantoni said.

This also means builders would remain optimistic about new ventures, and sellers can also breathe easier.

Home Depot’s Profits Soar

A resurgent housing market is prompting homeowners to finally shell out money on home improvements and sending retailers such as Home Depot laughing their way to the banks.

Home Depot, also America’s largest home improvement retailer, posted profits surpassing analysts expectations. Net income increased 1.4 percent to 63 cents a share or $947 million from $934 million or 60 cents a share a year ago.

Analysts surveyed by Bloomberg were expecting 70 cents per share.

Home Depot “did an excellent job driving its sales growth with lower promotions,” John Tomlinson, an analyst at ITG Investment Research in New York told Bloomberg. Improvements in housing turnover and home prices are also positively impacting its sales trends, he said.

In September, new home sales rose 5.7 percent to 389,000, the fastest pace in two years. Builders, exuberant and optimistic about the economy, are breaking ground on more new projects, increasing housing starts by 15 percent. Home Depot is encouraged by the signs in the housing sector. The company expects sales to increase 5.2 percent this year, up from its previous expectation of a 4.6 percent gain.

I am interested in refinancing my home. We have a grand home in Sacramento on H Street across from McKinnley park. Could someone get in touch with me talk about refinancing through Home Depot. I have heard from a friend that the rates are low and the process is quite easy. Thank you Karen Hutchinson

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